Insights

In November 2025, Sierra Leone’s Minister of Finance presented the 2026 budget with the theme “Enhancing Domestic Revenue Mobilisation for Sustained Economic Stability and Improved Service Delivery”.

Framed within a context of improving, yet fragile macroeconomic indicators, the government’s success in reducing inflation to 4.4% as of October 2025, and maintaining a stable exchange rate, provide the basis for the proposed fiscal reforms. However, with a public debt stock of US$3.2 billion and declining official development assistance, we believe the “constrained fiscal situation” cited by the Minister is also a significant driver of the new tax measures.

The losers

It is our view that the most immediate “losers” in the 2026 budget are established corporations across most sectors (including mining, oil and gas), primarily due to the restoration of the Corporate Income Tax (CIT) rate. The CIT rate has been restored to 30.0% from the COVID-adjusted 25.0%. This adjustment, expected to yield NLe703.2 million (US $ 30.6 million), aligns Sierra Leone with regional averages, but increases the direct tax burden on profitable entities.

The government is also expanding the scope of the Minimum Alternate Tax to include all companies, a move alongside the abolition of investment allowances, projected to yield NLe 187.5 million (US$ 8.1 million) in revenue. We believe the move is intended to tackle tax avoidance, ensuring that even companies reporting losses for tax purposes contribute to the treasury.

The abolition of the investment allowance is a notable setback for capital-intensive businesses. While the government argues that accelerated depreciation remains a benefit, the removal of this allowance increases the effective tax rate for new investments.

Mining and extractive industries

In the mining sector, the budget signals a shift from a purely regulatory role to one of active state participation. The budget emphasises the government’s direct participation through the Sierra Leone Mines and Minerals Development and Management Corporation (SLMMDMC) and the Mineral Wealth Fund (MWF).

Revenue imbalance

The budget highlighted that while mineral exports reached US$1.2 billion in 2024, government revenue from royalties and licenses was only 3.6% of that value. We believe this disparity will drive more aggressive enforcement and potentially tougher negotiations for future mineral rights. Also, the operationalisation of the “iron ore Safe Harbour Framework” and a new Compliance Improvement Plan for extractive industries suggest a more rigorous tax administration environment.

The winners

Agribusiness and energy

We identify agribusiness and certain segments of the energy sector as the primary winners, benefiting from targeted exemptions and strategic prioritisation. To support the “Feed Salone” – the government’s flagship initiative, the budget increases import duties to 35.0% on substitutes such as bottled water, eggs and tomato paste. This is a clear win for domestic producers, as it creates a protected market environment.

Renewable energy incentives

In a significant pro-poor and pro-environment move, Liquid Petroleum Gas (LPG), cooking stoves, and solar panels are now exempt from GST and import duties. We view this as a major incentive for investors in the renewable energy and “last mile” distribution sectors. However, while energy remains a priority, the budget indicates a plan to rationalise energy subsidies. This may lead to higher costs for industrial users but aims to improve the financial viability of the national grid.

General investment and trade

The implications for the general investment climate are nuanced. The budget allocates NLe17.2 million (US$0.7 million) to the Ministry of Trade and Industry for business reforms, including an “investor facilitation One Stop Shop”. If successfully implemented, this could reduce administrative bottlenecks.

Investors should note the increase in withholding tax on capital incomes (interests, dividends) for non-residents from 15.0% to 20.0%. It is our view that this may slightly dampen the attractiveness of Sierra Leone for foreign portfolio investors.

The restoration of GST on items such as processed seafood and periodicals indicates that the government is willing to tax consumption at the upper end of the market, while protecting basic goods.

In summary, the 2026 budget leans toward a more aggressive, state-led revenue generation model. While agribusiness and some aspects of renewable energy benefit from protective and incentive-based policies, the general corporate sector should prepare to navigate a higher CIT rate and a more aggressive tax administration. For investors, the primary risk lies in the increased cost of compliance and the higher tax floor created by the expanded MAT. However, for those aligned with the government’s “Feed Salone” and green energy priorities, the budget offers significant competitive advantages.

In November 2025, Sierra Leone’s Minister of Finance presented the national budget for the 2026 fiscal year. The budget is set against a backdrop of shrinking international aid and a pressing need for domestic revenue mobilisation.

The fiscal context

Themed “Enhancing Domestic Revenue Mobilisation for Sustained Economic Stability and Improved Service Delivery”, the budget underscores a determined effort by the government to reduce its dependence on foreign assistance. With a projected real GDP growth of 4.5%, driven largely by agriculture and mining, the government is seeking to capture a greater share of this growth to fund public services and infrastructure. However, it is our view that this aggressive revenue drive, while necessary for fiscal stability, introduces a layer of complexity for capital-intensive sectors such as mining.

Increase in corporate tax

A key feature of the 2026 budget is the restoration of the Corporate Income Tax (CIT) rate to 30%, up from the previous 25%. We believe this move reflects the government’s commitment to align its fiscal regime with regional benchmarks and to ensure that corporations contribute more substantially to the national treasury.

Further, the expansion of the minimum alternate tax (MAT) to apply to all companies–regardless of profitability, represents a significant shift. While it simplifies the tax code, it removes a key incentive that previously cushioned the high cost of machinery and technical equipment in the mining sector. We believe these measures collectively signal that the era of negotiated tax holidays and special concessions may be ending, as the government seeks a more uniform and predictable revenue stream.

Incentives and the “mining renaissance”

Despite the rise in headline taxes, the budget is not devoid of incentives. The government continues to frame the sector as a “mining renaissance”, maintaining a strong focus on mineral exports, projected to reach approximately $1.9 billion.

A key incentive for mining companies lies in energy. The budget introduces zero import duties for LPG, solar panels, and related accessories. It is our view that this provides an opportunity for mining firms to diversify their energy needs using green energy solutions. Given the historically high cost of diesel-powered mining operations, we believe investors can leverage these duty waivers to build more sustainable and cost-effective energy microgrids, thereby offsetting some of the increased corporate tax burden, and enabling their GHG reduction.

Foreign staff and the local content

The budget and the accompanying Finance Act 2026 continue to emphasize the importance of local content and the taxation of non-Sierra Leonean staff. Although specific new fees for work permits were not the headline feature of the 2026 budget speech, the emphasis on “strengthening tax administration” and “addressing illicit financial flows” suggests a more rigorous enforcement of payroll taxes (PAYE) for expatriates.

We believe the government’s stance on foreign personnel is twofold: first, to maximise revenue from high-earning non-residents, and second, to incentivise the training and hiring of Sierra Leonean nationals. It is our view that mining companies would have to integrate local ownership and leadership structures to navigate the tightening regulatory environment and to secure their “social license” to operate.

Rising indirect costs

While the corporate tax changes are the most direct hit, investors would also need to consider the rise in indirect costs. The restoration of the excise duty on cement (NLe 10 per 50kg) and the increase in import duties on various manufactured goods from 20% to 35% will likely inflate the cost of mine construction and maintenance. We believe these protectionist measures, intended to support local manufacturing, may inadvertently increase the capital and operation expenditure for mining projects that rely on imported industrial inputs.

In sum, provisions in the 2026 budget affecting the mining sector are mixed. On one hand, the government has indicated its support for mining sector led growth, and is investing in community infrastructure to facilitate operations. On the other hand, the budget’s “pro-people” fiscal stance necessitates a higher tax take from the sector, demanding a shift in investors’ strategies. Success will depend on operational efficiency, taking advantage of green energy incentives, and a commitment to the government’s local content agenda. It is our view that while the fiscal space is constrained, Sierra Leone remains a compelling draw, provided investors can navigate the heightened tax landscape with agility.